SABMiller Zim unit down on dollar crunch

Harare - Delta Corporation, the Zimbabwean brewer and soft drinks maker set to be brought under control of the merged entity between SABMiller [JSE:SAB] and Anheuser-Busch (AB) InBev [JSE:ANB], said on Monday that its lager beer volumes were down on the back of a dollar crunch and a biting economic landscape.

SABMiller currently controls Zimbabwe's biggest brewer which also makes soft drinks and sorghum-based opaque beer. Delta Corporation management has said in the past week that it does not anticipate significant changes from the merger deal between its parent company SABMiller and AB InBev, expected to be finalised this month.

“The trading environment continues to be constrained by depressed consumer spending, limited access to cash and the generally weak macro-economic performance,” said Delta Corporation.

This forced lager beer volumes for the quarter downwards by 7% and by as much as 11% for the half-year period to end-September. Delta also previously battled cheap imported alcoholic and soft drink products, mainly from Zambia, Mozambique and South Africa.

The soft drinks category was however 3% up on the previous quarter but down by a similar margin on the half-year basis. Zimbabwe has introduced import restrictions and these could have helped Delta’s non-alcoholic beverages category.

“The shortages of foreign currency resulted in reduced importation of consumer goods leading to an increase in demand for some of our products,” Delta said.

Despite this, revenues are still down by about 6% for the quarter and by about 8% for the half-year. The company will release its half-year financials on November 10 and this will carry finer details on revenue, profitability and volumes.

The revenue decline is however “in line with the changes in the product mix and pricing decisions”, Delta said. Just like many other companies in Zimbabwe, Delta has had to reduce prices for its products in a bid to push higher volumes as consumer spending patterns take a plunge.

The cash crunch that Zimbabwe is battling has culminated in the government lining up introduction of a local bond currency. However, this has now been delayed. For Delta, the cash crunch – which has culminated in long queues at banks – has led to delays in the group’s foreign payments for new plants in Masvingo and Kwekwe.

Delta said the new plants are now “expected to contribute to production” before the end of the current year. New disruptions have also been encountered from constrained water supplies as the dry season ravages Zimbabwe and the region.